Anticipating the Unintended #28: The State Proposes, and the State Disposes

This newsletter is really a weekly public policy thought-letter. While excellent newsletters on specific themes within public policy already exist, this thought-letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. It seeks to answer just one question: how do I think about a particular public policy problem/solution?

PolicyWTF: Price Caps, SF Style

This section looks at egregious public policies. Policies that make you go: WTF, Did that really happen?

— Pranay Kotasthane

With governments in the driving seat in these times of crisis, there’s no shortage of PolicyWTFs.

If you thought that price caps were a favourite instrument of the Indian government alone, turn your attention to the city of San Fransisco. The City Hall announced a temporary limit on the commission that third-party food delivery companies can charge restaurants during the COVID-19 pandemic. The logic behind this move in the words of the Mayor:

Restaurants across San Francisco are struggling to stay open. In these tough financial circumstances, every dollar counts and can make the difference between a restaurant staying open, or shuttering. It can make the difference between staying afloat or needing to lay-off staff.

Remember, restaurants there are only allowed to offer take-out and delivery which means third-party food delivery companies such as UberEats are critical for restaurants to operate. Unsurprisingly, UberEats stopped deliveries in some areas of the city on the grounds that this government order limits their ability to cover operational costs.

But that’s not where this ends. The area they have stopped services to is apparently a low-income neighbourhood. So the familiar narrative — ‘rich-companies-discriminating-against-the-poor-in-times-of-crisis’ — has taken hold.

The retaliation by UberEats aside, a price cap on food deliveries is not going to save restaurants. Such moves disincentivise all food delivery companies from adding more staff. Moves to reassure customers that take-out food is safe might work better.

Read the full edition here.